9 March 2026
- The US imposes a ‘global tariff’ of 10% to address “fundamental international payments problems”: Another tariff measure on questionable legal grounds?
- Declare or beware: In addition to Halal labelling, Indonesia publishes a draft regulation on mandatory Non-Halal labelling for non-Halal products
- Increased controls: The EU applies stricter import controls on arachidonic acid oil from China due to contaminated infant formula
- Recently adopted EU legislation
The US imposes a ‘global tariff’ of 10% to address “fundamental international payments problems”: Another tariff measure on questionable legal grounds?
By Tobias Dolle, Stella Nalwoga, and Paolo R. Vergano
On 20 February 2026, the US Supreme Court held that the US’ International Emergency Economic Powers Act(hereinafter, IEEPA) does not authorise the US President to impose tariffs. The US Supreme Court’s decision was pivotal in determining the scope of the US President’s authority under the IEEPA, which had formed the basis for various tariff measures introduced by the US Administration in 2025. Prior to the ruling, the US Administration had already made clear that, regardless of the Court’s decision, imposing new and additional tariffs would remain a cornerstone of US trade policy. Indeed, mere hours after the ruling, the US Administration announced new tariffs, this time citing Section 122 of the US Trade Act of 1974, which concerns “large and serious” balance of payments deficits, as the legal basis for imposing an additional ‘global tariff’ of 10% ad valorem.
This article examines the rationale for the additional tariffs imposed on the basis of Section 122 in the context of the rules of the World Trade Organization (hereinafter, WTO) and the implications for US’ trading partners.
Section 122 – Temporary tariff measures to address balance of payments crises
“Balance of payments” refers to a statistical summary of a country’s trade in goods, services, and cross-border financial flows vis-à-vis the rest of the world over a specific period of time. It is an important economic indicator that tracks the flow of resources and money between a country and its trading partners. Under domestic law and under WTO rules, countries may impose trade restrictions to address balance of payments crises.
For example, in the period between 1990 and 1991, India encountered a balance of payments crisis, as its foreign exchange reserves were depleted due to, inter alia, surging oil prices and plunging revenues from exports and remittances. Consequently, the Government of India was unable to pay for its imports and debts, and nearly defaulted. To preserve its foreign exchange reserves, the Government implemented special import measures, such as stricter import licensing procedures, quotas on non-essential goods, and increased tariffs on capital goods.
Section 122 of the US Trade Act of 1974
In the US, measures taken to address “balance of payments” crises are regulated by Section 122 of the Trade Act of 1974. At the multilateral level, Article XII of the WTO General Agreement on Tariffs and Trade (GATT 1994) sets out rules on “balance of payments” measures.
Section 122 of the Trade Act of 1974 provides that, “whenever fundamental international payments problems require special import measures to restrict imports” in order to “(1) to deal with large and serious United States balance of-payments deficits, (2) to prevent an imminent and significant depreciation of the dollar in foreign exchange markets, or (3) to cooperate with other countries in correcting an international balance-of-payments disequilibrium”, the US President must proclaim: “(A) a temporary import surcharge, not to exceed 15 percent ad valorem, in the form of duties (in addition to those already imposed, if any) on articles imported into the United States; (B) temporary limitations through the use of quotas on the importation of articles into the United States; or (C) both a temporary import surcharge described in subparagraph (A) and temporary limitations described in subparagraph (B)”.
Section 122 actions may only be imposed for a period not exceeding 150 days, unless extended by the US Congress.
The justification for the claimed balance of payments “deficit”
Shortly after the US Supreme Court issued its ruling on the IEEPA tariffs, on 20 February 2026, US President Donald J. Trump issued a Proclamation imposing, on the basis of Section 122 of the Trade Act of 1974, an additional ad valoremimport duty of 10% on nearly all imports into the US for a period of 150 days, effective from 24 February 2026 to 24 July 2026. This Proclamation was evidently prepared in advance in anticipation of such ruling.
The Proclamation contends that the US’ balance-of-payments position, “under any reasonable understanding of the term in the context of section 122, is currently a large and serious deficit”. As examples of this alleged imbalance, the Proclamation points to several examples, including that the US “runs a deficit in selling goods and services overseas”, “has recently reflected quarterly deficits in its return on investment or labor”, and “runs a deficit in voluntary transfers, such as remittances”. In other words, the US “runs a trade deficit, does not currently make a net income from the capital and labor that it deploys abroad, and experiences more transfer payments, on net, flowing out of the country than into the country”. US President Trump concluded that “special measures to restrict imports”, namely, a temporary import surcharge of 10%, were “required to address those problems, as authorized by section 122”. The new tariff is stacked onto the most-favoured nation (hereinafter, MFN) tariff rates and additional tariffs on the basis of Section 301 of the US Trade Act of 1974 for products from countries subject to such measures due to unfair trading practices, such as China’s acts, policies, and practices related to technology transfer, intellectual property, and innovation, which have been introduced in 2018.
Could the global 10% tariff under Section 122 withstand legal challenges?
US Courts have not yet had the occasion to interpret the provisions under Section 122, though if the ‘global tariff’ of 10% under Section 122 were to be challenged, the likely outcome appears similarly evident, as it was for the IEEPA tariffs. A number of economic and legal experts already publicly stated that the reasons stated by US President Trump in his Proclamation do not constitute a “fundamental international payments problem” that justifies the imposition of tariffs under Section 122. More specifically, it has been argued that a “balance of payments deficit is not the same thing as a trade deficit” and that “You cannot have a balance of payments [deficit] if you have a flexible exchange rate, as the US currently does”.
It should also be noted that the Proclamation exempts certain product categories from the temporary 10% import duty under Section 122, such as certain agricultural products, electronics, and critical minerals. However, Section 122 only allows product-specific exemptions in cases of an “unavailability of domestic supply at reasonable prices, the necessary importation of raw materials, avoiding serious dislocations in the supply of imported goods, and other similar factors” or when import-restricting actions would be “unnecessary or ineffective” in carrying out the purposes of Section 122. In the absence of a “fundamental international payments problem”, such exemptions would likewise be invalid. Moreover, Section 122 expressly prohibits import restrictions or product-specific exceptions adopted “for the purpose of protecting individual domestic industries from import competition”, raising further doubts that the global 10% tariff could withstand legal challenges in light of the US Administration’s stated objectives of its “America First” trade policy.
Consistency with the WTO rules on Balance of Payments-related measures?
On the basis of the WTO rules, WTO Members must ensure that their restrictive measures for balance of payments purposes comply with the GATT 1994. While the GATT 1994 does not expressly define “balance of payments”, Article XII on ‘Restrictions to Safeguard the Balance of Payments’ and Article XVIII:B on ‘Governmental Assistance to Economic Development’ lay down rules on how WTO Members must implement their “balance of payments” measures. In particular, Article XII (2)(a) of the GATT requires that import restrictions be limited to what is strictly necessary.
Moreover, Article XII(3)(b) allows Members applying such measures to prioritise essential imports over less essential goods, but does not provide a general justification for broad and indiscriminate tariffs. Article XII also establishes procedural safeguards, including a proper procedure, beginning with a notification to the WTO General Council of any new or modified measure. Notified measures are subject to consultation with the WTO Committee on Balance of Payments Restrictions, which reports back to the General Council with its conclusions and recommendations. To date, the US has not yet notified the measures taken under Section 122 of the Trade Act of 1974 to the WTO. If a WTO Member continues to apply unjustified “balance of payments” measures, other WTO Members can request the establishment of a WTO dispute settlement panel.
Only an interim solution?
As already acknowledged by the US Administration, Section 122 measures are temporary and may not be maintained as the legal basis for unilateral additional tariffs. Businesses should anticipate continued turbulent times ahead, as the US Administrations’ 2026 Trade Policy Agenda indicates a focus on “higher tariffs, more bilateral agreements, and specialized interventions to support critical sectors”, namely, expedited investigations into unfair trading practices for sectors such as pharmaceutical pricing, digital services taxes and digital discrimination under Section 301 of the Trade Act of 1974, as well as concluding investigations into imports that “threaten national security” under Section 232 of the Trade Expansion Act of 1962.
It appears that the US Administration’s new ‘global tariff’ of 10% imposed under Section 122, although ostensibly aimed at addressing what US President Trump claims to be a “large and serious” balance of payments deficit, is unlikely to stand up to legal scrutiny, neither domestically in the US, nor at the WTO. Given that Section 122 measures are temporary, business and governments should prepare for other, more targeted, measures on specific countries and products, and adopt an expert-guided and evidence-based proactive engagement strategy with the US Administration and its trading partners to secure tailored relief or exemptions from future actions or preferential treatment under future ‘trade deals’.
For any additional information or legal advice on this matter, please contact Paolo R. Vergano
Declare or beware: In addition to Halal labelling, Indonesia publishes a draft regulation on mandatory Non-Halal labelling for non-Halal products
By Imelda Jo Anastasya, Pattranit Chantaplaboon, and Paolo R. Vergano
On 12 February 2026, Indonesia’s Halal Product Assurance Agency (i.e., Badan Penyelenggara Jaminan Produk Halal, hereinafter, BPJPH) circulated a draft regulation regarding the Format and Procedures for the Affixing of Non-Halal Statements (hereinafter, Draft BPJPH Regulation) to the World Trade Organization’s (hereinafter, WTO) Committee on Technical Barriers to Trade (hereinafter, TBT Committee). The Draft BPJPH Regulation would implement Article 110 of Government Regulation No. 42 of 2024 on the Administration of the Halal Product Assurance Sector (hereinafter, GR 42/2024), which governs the mandatory inclusion of non-Halal statements on products derived from Haram materials (i.e., prohibited under Islamic law).
This article provides an overview of Indonesia’s regulatory framework for Halal certification and the Draft BPJPH Regulation, assesses its compliance with WTO rules, and highlights potential implications for businesses.
Indonesia’s Halal framework
Indonesia is gradually implementing mandatory Halal certification for a wide range of products over an eight-year period between 2026 and 2034. Food and beverage products, as well as products from slaughtered animals and slaughtering services, must comply as of 17 October 2026 (see Trade Perspectives, Issue No. 16 of 9 September 2024 and Issue No. 20 of 3 November 2025).
The mandatory Halal certification requirement is established under Law No. 33 of 2014 on Halal Product Assurance and further implemented by GR 42/2024. In accordance with Article 2 of GR 42/2024, products derived from Halal materials (i.e., permissible under Islamic law), whether domestically produced or imported, must comply with certain Halal certification and labelling requirements in order to be marketed in Indonesia. On the basis of Article 110 of GR 42/2024, products derived from Haram materials (e.g., animals classified as “severely impure” under Islamic law, such as pigs, and alcohol) may only be marketed in Indonesia when they bear a Non-Halal Statement, expressly declaring that they do not satisfy the Halal standard.
Unlike the mandatory Halal certification requirement, which is being introduced in phases across product categories, the requirement to affix a Non-Halal Statement applies since 17 October 2024. The certification and labelling requirements aim at ensuring that consumers can clearly distinguish between Halal and non-Halal products.
The fine print of non-Halal disclosure: Key elements of the Draft BPJPH Regulation
While the Non-Halal Statement requirement has been already in force since 2024, Article 110(2) of GR 42/2024 only lays out the general regulatory framework, providing that the Non-Halal Statement must be “easily visible and legible” and may not be “easily removed, detached, or damaged”. Article 110(3) of GR 42/2024 provides that more detailed technical requirements would be stipulated in an implementing regulation, which has now been circulated. Following the enactment of the Draft BPJPH Regulation, business actors will be required to adjust their practices to comply with the more specific requirements within a period of three years.
Under the Draft BPJPH Regulation, a Non-Halal Statement must be affixed to products derived from Haram materials or to products that are not processed in accordance with Halal standards (e.g., where the location, facilities, or equipment used are those for the slaughter of non-Halal animals). The Non-Halal Statement must be affixed to the packaging and/or a specific part of the product in the form of an image of a pig for products containing pork, or a declaration that the product is non-Halal, as provided in the Annex to Draft BPJPH Regulation.
Where the packaging is “too small” to accommodate a Non-Halal Statement, the Non-Halal Statement must be affixed on a hang tag, brochure, display panel, shrink wrap, or other form of labelling format. The Draft BPJPH Regulation further requires the Non-Halal Statement to be placed proportionally, to have “sufficient contrast”, and not to be obscured by any other elements of the product packaging. Non-retail products and refill cosmetics are exempt from this requirement, as long as supporting documents are available to inform consumers that the product is derived from Haram materials and/or not processed in accordance with Halal standards. Food and beverage products containing the word “pork” in their name are also exempt from providing a Non-Halal Statement.
Although mandatory Halal requirements have been introduced in several Member States of the Association of Southeast Asian Nations (hereinafter, ASEAN), such as Malaysia and Brunei Darussalam, Indonesia is the first ASEAN Member State to also impose a Non-Halal Statement requirement.
More trade restrictive than necessary?
Requiring that all products marketed in Indonesia that fall within the covered product categories provide a Halal certification and label or a Non-Halal Statement will increase the regulatory burden on businesses seeking to sell products in Indonesia. From an international trade law perspective, a Non-Halal Statement can be classified as a “technical regulation” under Annex 1 of the Agreement on Technical Barriers to Trade (hereinafter, TBT Agreement), defined as a “document which lays down product characteristics or related production methods with which compliance is mandatory”.
In particular, a Non-Halal Statement requirement applies to an identifiable group of products, namely Haram products; it lays down the characteristic of the product, which is their Haram or non-Halal nature; and compliance with the requirement is necessary for the relevant products to be marketed in Indonesia. The fact that Indonesia notified the Draft BPJPH Regulation to the WTO TBT Committee confirms this interpretation.
In accordance with its obligations under Article 2.1 of the TBT Agreement, Indonesia must ensure that the Non-HalalStatement is “not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade”. Article 2.2 also stipulates that technical regulations must “not be more trade-restrictive than necessary to fulfil a legitimate objective”, such as the protection of human health. Given that Indonesia already maintains a mandatory Halal certification requirement for Halal products, requiring all non-Halal products to affix a Non-HalalStatement could be considered as “unnecessary”, given that consumers can reasonably infer that a product is non-Halalif it does not carry the Halal label that will be progressively introduced for various product sectors.
Additionally, other mandatory information provided on certain goods, such as “contains alcohol” on wine or spirits products, could arguably also satisfy the non-Halal disclosure requirement. Therefore, to ensure compliance with the TBT Agreement, Indonesia would have to demonstrate, through sufficient evidence, that a mandatory Non-HalalStatement is indeed necessary to achieve the indicated objectives of consumer protection and that less trade-restrictive alternatives, such as solely relying on the absence of a Halal label, would not provide consumers with sufficiently clear, reliable, and immediate information.
Implications for businesses
The Draft BPJPH Regulation will still need to be enacted by the BPJPH before entering into force. Once enacted, all businesses must comply with the additional requirements for the Non-Halal Statement when placing products on the Indonesian market. Businesses whose products have already been affixed with a Non-Halal Statement in accordance with the general provisions of GR 42/2024 may continue placing their products on the market, but must ensure compliance with the more specific rules following a transition period of three years.
The mandatory Non-Halal Statement requirement under GR 42/2024, and the more detailed technical obligations under the Draft BPJPH Regulation, impose important compliance costs for the Indonesian market, particularly on micro, small, and medium enterprises exporters. Relevant businesses should closely monitor the related regulatory developments and update their product labels in accordance with the new rules.
For any additional information or legal advice on this matter, please contact Paolo R. Vergano
Increased controls: The EU applies stricter import controls on arachidonic acid oil from China due to contaminated infant formula
By Amanda Carlota, Ignacio Carreño García, and Tobias Dolle
As of 26 February 2026, imports of arachidonic acid (hereinafter, ARA) oil from China are subject to more stringent official controls upon entry into the EU on the basis of Commission Implementing Regulation (EU) 2026/459 of 24 February 2026 amending Implementing Regulation (EU) 2019/1793 as regards the temporary increase of official controls and emergency measures governing the entry into the Union of arachidonic acid oil originating in China. The increased controls were introduced after authorities in several EU Member States detected the presence of the toxin cereulide in infant formula, leading manufacturers to recall their products.
This article provides an overview of the events that led to the increased official controls on consignments of ARA oil originating in China, examines the additional requirements for exporters, and discusses the implications of these measures on infant food manufacturers.
Detection of cereulide in infant formula triggers recalls
Cereulide is a heat-resistant toxin, which is produced by certain strains of the Bacillus cereus bacteria, and which can cause gastrointestinal symptoms, such as nausea, vomiting, and diarrhoea. The consumption of formula contaminated with cereulide can lead to severe illness, or even death, in infants. In the period between December 2025 and February 2026, notifications following routine checks by the competent authorities on the EU’s Rapid Alert System for Food and Feed (RASFF) identified the presence of cereulide in infant formula in various EU Member States (i.e., Belgium, Denmark, Estonia, Finland, France, Germany, Ireland, Italy, the Netherlands, Poland, and Spain), Switzerland, and in products originating from China,.
Article 19 of Regulation (EC) No 178/2002 of the European Parliament and of the Council of 28 January 2002 laying down the general principles and requirements of food law, establishing the European Food Safety Authority and laying down procedures in matters of food safety (the EU’s General Food Law) provides that, where a food business operator has reason to believe that a food product, which it has imported, produced, processed, manufactured or distributed, is not in compliance with the EU’s food safety requirements, it must immediately initiate procedures to withdraw the product from the market and, if necessary, recall the product from consumers. Following the notifications, various food manufacturers, including Nestlé and Danone, initiated global withdrawals and recalls of their infant formula. Following the recalls, six EU Member States (i.e., Austria, Belgium, Denmark, France, Luxembourg, and Spain) and the UK reportedcases of infants developing symptoms consistent with cereulide intoxication after consuming recalled infant formula.
An internal investigation by a Swiss company and follow-up investigations by the competent authorities of affected EU Member States traced the cereulide contamination back to a specific ingredient, namely ARA oil, an omega-6 fatty acid, which, according to scientific research, is critical for infant growth, brain development, and health. ARA oil is naturally found in human breast milk and commonly added to infant formula. According to media reports, the ARA oil used in the recalled infant formula was manufactured by a single Chinese producer, which supplied multiple manufacturers in the EU.
Health risk leads to import controls on imports of ARA oil
According to the European Commission, the notifications, recalls, and investigations provided evidence that ARA oil imported from China was “likely to constitute a serious risk for human health”. It was, therefore, considered necessary to provide for an “increased level of official controls and special conditions” in relation to the importation of consignments of ARA oil from China.
Accordingly, the Annex to Commission Implementing Regulation (EU) 2026/459 amends Annex II to Commission Implementing Regulation (EU) 2019/1793 of 22 October 2019 on the temporary increase of official controls and emergency measures governing the entry into the Union of certain goods from certain third countries implementing Regulations (EU) 2017/625 and (EC) No 178/2002 by adding ARA oil originating in China to the list of ‘Food and feed from certain third countries subject to special conditions for the entry into the Union due to contamination risk by mycotoxins, including aflatoxins, pesticide residues, microbiological contamination, cereulide toxin, Sudan dyes, and plant toxins’, which now expressly refers to cereulide toxin.
In more general terms, EU law establishes maximum levels for contaminants subject to special conditions for entry into the EU. As a new addition to the list of contaminants, there is currently no statutory maximum level for cereulide. However, in its rapid risk assessment published on 2 February 2026, the European Food Safety Authority (hereinafter, EFSA) established an acute reference dose (ARfD) for cereulide of 0.014 μg/kg body weight for infants, which refers to the estimated amount of cereulide that can be consumed by infants in 24 hours or less without “appreciable health risk”.
The EFSA also established that cereulide concentrations in reconstituted (liquid) infant formula above 0.054 μg/L (for infant formula) and 0.1 μg/L (for follow-on formula) may lead to the ARfD being exceeded and, therefore, may pose potential safety concerns. While these thresholds are intended to help guide EU public health authorities, they will also inform any future EU legislation on maximum levels for cereulide.
Consignments of food and feed listed in Annex II to Commission Implementing Regulation (EU) 2019/1793 are subject to more frequent physical and identity checks to ensure that their cereulide content remains at safe levels. With the recent amendment, identity and physical checks of ARA oil originating in China are now set at 50% of consignments entering the EU.
Articles 10 and 11 of Commission Implementing Regulation (EU) 2019/1793 further require each consignment of food and feed listed in Annex II to be accompanied by the results of sampling and analyses performed by the competent authorities of the third country of origin, or of the country where the consignment is consigned from, if that country is different from the country of origin, as well as an official certificate.
Notably, the amendments provide for a transitional period of two months for consignments of ARA oil that had already been dispatched from China or from another third country before the date of entry into force of Commission Implementing Regulation (EU) 2026/459. Such consignments may enter the EU until 26 April 2026 without being accompanied by the required results and the official certificate, but will be subject to the increased controls.
Greater safety, but additional expenses for food business operators
The increase in the frequency of physical and identity checks means that consignments of ARA oil originating in China are more likely to encounter delays and face a higher probability of rejection. This may create greater uncertainty for infant formula manufacturers and other food business operators that use ARA oil as an ingredient in their products. However, from the EU regulator’s perspective, this measure is necessary to ensure food safety. Food business operators will also incur additional compliance costs starting from 27 April 2026, when each consignment of ARA oil from China must be accompanied by the results of sampling and analyses and the official certificate. Operators may bear part or even all of the additional expenses of setting aside product quantities for sampling and analyses, as well as destroying any non-compliant consignments.
As the cereulide contamination was traced back to a single producer that supplies multiple customers in the EU, EU-based manufacturers are advised to expand and diversify their supplier network to reduce dependencies and prevent similar issues in the future. Manufacturers should also conduct regular audits of their supply chains to ensure that all suppliers remain fully compliant with the applicable EU import and food safety requirements.
For any additional information or legal advice on this matter, please contact Ignacio Carreño Garcia
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Imelda Jo Anastasya, Amanda Carlota, Ignacio Carreño García, Pattranit Chantaplaboon, Joanna Christy, Tobias Dolle, Alya Mahira, Stella Nalwoga, and Paolo R. Vergano contributed to this issue.
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